Annual Report and Accounts 2009 - BG Group

25 PENSIONS AND POST-RETIREMENT BENEFITS
The majority of the Group’s UK employees participate in the BG Pension Scheme (the “Scheme”). The Scheme is of the defined benefit type. It is a
registered pension scheme established under trust. The Trustee is BG Group Pension Trustees Limited. The Scheme is funded to cover future pension
liabilities in respect of service up to the balance sheet date. It is subject to an independent valuation at least every three years, on the basis of which
the independent qualified actuary certifies the rate of employers’ contributions that, together with the specified contributions payable by the employees
and proceeds from the Scheme’s assets, are expected to be sufficient to fund the benefits payable under the Scheme.
Participating employers’ contributions are certified by the Scheme’s independent qualified actuary. For the year ended 31 December 2009, the employers’
contribution rate in respect of most Scheme members was effectively 26.9% of pensionable pay up to 31 July 2009 (including Scheme expenses) and 35.2%
of pensionable pay thereafter (excluding Scheme expenses which are now met directly by the Company). In addition, 3% of pensionable pay was
contributed by most members either directly or by their employer via a salary sacrifice arrangement.
A full independent actuarial valuation of the Scheme for funding purposes was completed as at 31 March 2008. This showed that the aggregate market
value of the Scheme’s assets at 31 March 2008 was £577m, representing some 83% of the accrued liabilities. The Group made one payment of £27m in
2009 and intends to make five further payments of £27m in the years to 2014 in order to reduce the Scheme’s deficit. Aggregate Company contributions
for the year ending 31 December 2010 are expected to be £71m.
The BG Supplementary Benefits Scheme is available to provide benefits in excess of the ‘lifetime allowance’. This scheme is an unfunded, unregistered
arrangement.
With effect from 2 April 2007, new UK employees have been offered membership of a defined contribution stakeholder pension plan, the BG Group
Retirement Benefits Plan (the “Plan”). Life assurance and income protection benefits are also provided under separate plans; these benefits are fully
insured. Members may choose the rate at which they contribute to the Plan, either directly or via salary sacrifice, and the additional employer’s
contribution is determined by the rate that the member selects. A wide range of funds is available from which members may choose how the
contributions will be invested. The cost of the Plan has been included in the amounts recognised in the consolidated income statement in the table below.
There is an unfunded post-retirement employee benefit plan for healthcare in respect of employees of Comgás. Provision has been made in respect
of this plan.
The Group also has a number of defined contribution schemes and smaller defined benefit schemes. These are not material in Group terms.
The following information in respect of the Scheme, the BG Supplementary Benefits Scheme and the Comgás post-retirement healthcare plan
(described hereafter as the “plans”) has been provided in accordance with IAS 19.
Valuations of all of the plans’ assets and expected liabilities as at 31 December 2009 were carried out by independent actuaries in accordance with the
requirements of IAS 19. In calculating the charge to the income statement including any recognised actuarial gains and losses, a 10% corridor was applied.
This means that a portion of actuarial gains and losses is recognised as income or expense only if it exceeds the greater of:
a) 10% of the present value of the defined benefit obligation at that date (before deducting plan assets); and
b) 10% of the fair value of any plan assets at that date.
These limits are calculated and applied separately for each defined benefit plan at each balance sheet date and the portion of actuarial gains and losses
to be recognised in future years for each plan is the excess of actuarial gains and losses over and above the 10% limits divided by the expected average
remaining working lives of the employees participating in that plan.
The valuations as at 31 December were based on the following assumptions:
BG plans
%
2009 2008
Comgás
healthcare
plan
%
BG plans
%
Comgás
healthcare
plan
%
Rate of price inflation and benefit increases (a) 3.9 4.5 3.3 5.0
Future increases in earnings 5.9 n/a 5.3 n/a
Discount rate 5.7 11.2 6.3 13.1
Healthcare cost trend rate n/a 10.0 n/a 8.1
(a) Rate of increase of deferred pensions and pensions in payment in excess of any Guaranteed Minimum Pension element.
If the discount rate used for the valuation of the BG plans was reduced by 0.1% to 5.6%, the defined benefit obligation would increase by £21m and the
service cost for 2010 would increase by £2m.
BG Group Annual Report and Accounts 2009
107
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